COLUMBIA -- Headed to Gov. Mark Sanford's desk is a plan that aims to restore fiscal responsibility to the state's unemployment agency by paying off a projected $2 billion in debt in the next five years and rebuilding the trust fund that provides benefits to jobless workers.
The House voted 96-1 on Thursday to sign off on a bill that creates a new system that taxes employers according to the frequency that they lay off workers. The bill is the latest in a series of legislative fixes intended to correct problems at the state Department of Employment and Workforce, formerly known as the Employment Security Commission.
House Majority Leader Kenny Bingham, R-Cayce, said the new taxation system will reward employers who don't layoff workers with no taxes and require those who layoff workers to pay their share.
"We have a system that is fair, competitive and puts South Carolina in a good light to businesses that are looking to locate here," Bingham said.
Lawmakers, since reconvening in January, have kicked out the management at the agency, made the agency part of the governor's Cabinet and instituted new polices that deny people fired for gross misconduct from collecting jobless benefits and begin again investigating fraud and abuse.
Sanford chose retired Air Force Brig. Gen. John Finan as the interim director.
Ben Fox, the governor's communications director, said Sanford is encouraged by the bill's passage.
"It's a good next step in a longer journey to address what was a multi-year failure at the Employment and Security Commission," Fox said in a statement. "These are first steps, not victory laps."
The agency has been under fire for its performance during the recession. One problem was that the management allowed the trust fund that provides unemployment benefits to go broke without doing more to warn legislators. Some legislators, however, knew the account was running out of money.
Businesses pay a yearly tax on every worker on the payroll to fund the benefits account.
The account ran out of money in late 2008 and since then the state has borrowed $886 million from the federal government, Finan said Thursday. The debt is projected to grow to $2 billion before the fund is solvent again.
The new plan eventually will charge between zero and about $900 for each employee. Businesses also will be charged an additional $21 per worker next year until the debt is repaid. Under the current system, employers pay between $87 and $427 a year on each worker. Over time, 95 percent of all businesses will pay less in taxes than they do now.
If Sanford signs the bill, as expected, the new taxing structure will be effective in January.
Otis Rawl, president of the state Chamber of Commerce, said the new plan is fair, although it will mean additional costs for businesses during the economic downturn. Repaying the debt is necessary, he said.
"Is now a good time to do it? No. Will there ever be a good time? No," Rawl said.